Blog|December 18, 2023

Legal Advisory Committee Q4 Newsletter

Our Legal Advisory Committee (LAC) is made up of an exceptional mix of legal firms, in-house counsel, and forensic accountants that work to understand the impact of new laws, regulations, and judicial decisions. During the final quarter of 2023, we held three LAC Board meetings where three MCLE (legal continuing education) presentations and three case laws were presented. We urge all member companies, particularly those with general counsel on staff, to join the LAC to network and address pertinent construction industry issues.

We would like to highlight a motion that was recently passed by our LAC. Legal professionals of our contractor or specialty contractor members can now join the LAC for free! You must be a member of AGC of California as a contractor or specialty contractor to qualify. If you are interested in joining or learning more about the LAC, contact Mary Alyssa Rancier, Policy Manager, at RancierM@agc-ca-org.

Additionally, we would like to congratulate Robert Roginson from Ogletree Deakins for earning the Associate Achievement Award that will be celebrated at our Installation & Awards Gala on February 2, 2024. If you would like to attend this event, please click here to register.

OCTOBER

MCLE: “Maximizing Risk Transfer in Catastrophic Project Loss Scenarios”

In this presentation, Will Bennett discussed strategies for successfully maximizing insurance and indemnity resources in the wake of a catastrophic construction loss, such as a building collapse. Construction losses extending beyond normal construction defect claims implicate different facets of coverage and require awareness and execution of strategies outside of those involved in typical claims. Unusual considerations like public image, public safety, evidence spoliation, and municipal politics complicate the process and draw on coverages and caselaw not typically involved. The presentation surveyed some of these coverages and outlined area of focus for anyone who finds themselves representing a contractor dealing with such a high-profile loss on one of its projects.

Will Bennett, Saxe & Doernberger & Vita, P.C

Will Bennett is a career insurance coverage attorney and represents policy holders in all aspects of insurance and risk transfer. He is regularly called upon to assist in the policy placement process and in this role, helps policy holders and their brokers put together a comprehensive coverage program where all lines of coverage work seamlessly together to avoid gaps. This work with brokers and underwriters gives him a broad practical understanding of the market and its intent. Will maintains an active litigation practice focused on complex insurance recovery actions across the country, having recovered more than $200million on behalf of his clients.

In addition to his bar admissions in California, Connecticut, and New York, Will is often admitted pro hac vice in other state and federal court jurisdictions. He has handled cases from the initial stages of strategy all the way through trial to verdict as lead counsel. His extensive experience includes serving as insurance coverage counsel for commercial, civil, and residential construction and real estate companies in disputes that have involved a huge array of subject matter, from construction catastrophe and defect to pollution liability

Case Law: “Fitness International, LLC v. KB Salt Lake III, LLC, 2023 Cal. App. LEXIS 735”

This matter involved an unlawful detainer action stemming from the non-payment of rent from Fitness International to KB Salt Lake III.  Fitness International was operating an indoor gym and fitness center in the Los Angeles area.  The parties entered into an amended lease, which contained a provision for Fitness International to renovate the premises. The construction began in November 2019 and was expected to be completed in August 2020.  Fitness International alleged the local COVID-19 closure orders prevented (1) the operations of its gym and (2) the retail construction for the renovations pursuant to the amended lease.  Fitness International stopped its construction, remained in possession of the premises, and stopped paying rent as a result of the COVID closure mandates.  The trial court ruled in favor of KB Salt Lake’s unlawful detainer action and granted its motion for summary judgment.  Fitness International appealed.

On appeal, the appellate court ruled:

  1. The COVID closures did not stop Fitness International from continuing with the renovations of the premises;
  2. The force majeure provision of the amended lease did not excuse Fitness International’s obligation to pay rent (Fitness International even admitted it had the funds to pay rent, despite the COVID closure orders);
  3. Fitness International’s temporary frustration of purpose argument was not viable as it failed to show how this doctrine excused its obligation to pay rent;
  4. The impossibility/impracticability arguments did not excuse Fitness International from paying rent; and
  5. Civil Code Section 1511 did not excuse Fitness International from paying rent.

The appellate court affirmed the trial court’s ruling for judgment entered for KB Salt Lake and against Fitness International with KB Salt Lake to recover its costs on appeal.

Justin Gelzayd, SMTD Law

Justin Gelzayd focuses his practice on construction and surety litigation. Mr. Gelzayd’s professional experience includes litigating cases involving construction defects, contract and bid disputes, and forming corporations and LLCs. Mr. Gelzayd is licensed to practice law in California and Florida.  Before going to law school, Mr. Gelzayd earned an accounting degree from the University of Arizona. Mr. Gelzayd earned his J.D. and LL.M. from the University of Miami School of Law in 2016.

NOVEMBER

MCLE: “Playing the Subcontractor Claim Pass-Through Game”

Chris and Mike went through the history and current status of the law governing this key topic, and then turned to new and current issues resulting from recent ‘pay-when-paid’ decisions.

Chris Morrow, SMTD Law

Chris is a founding partner. He represents general contractors, design engineering firms, construction managers, major trade contractors and owners on a variety of issues involving heavy civil construction, transportation, public works, and commercial construction projects. Representative projects include office buildings, hospitals, schools, highways, bridges, power plants, dams, airports, mass transit systems, and pipelines.

Chris counsels and advises clients with on-going project related matters, providing assistance with resolving claims at the project level with an eye towards mitigating costs and preserving claims. He has extensive experience assisting clients with bid protests and providing counsel for precontractual risk assessment. Once the client is awarded the project, Chris frequently assists with negotiating contractual provisions between owners, prime contractors, designers and subcontractors.

During the project, Chris assists with affirmative claim preparation, assessing and prosecuting subcontractor pass-through claims, responding and handling termination claims, and assisting with project closeout issues. He has comprehensive experience in claim preparation, prosecution of claims and contractual dispute resolution on public and private projects. As part of his representation, Chris has defended against claims involving construction and design defects, including pursing recovery for indemnity and breach of contract. Chris’s litigation experience includes both federal and state courts, arbitration, and DRB proceedings.

Michael Timpane, SMTD Law

Michael J. Timpane is the managing partner for SMTD’s Oakland office. He is an accomplished trial lawyer, mediator, arbitrator, special master and project neutral. Mr. Timpane has forty years of experience representing sureties, general contractors, subcontractors and owner/developers in complex construction, commercial, real estate and business matters. He specializes in handling major construction project defaults, with particular expertise in analyzing default scenarios, quickly conceiving and implementing cost-effective and loss-reducing measures for project completion, and resolving project disputes. Mr. Timpane also has significant expertise representing both insurance carriers and policyholders in a wide variety of insurance and insurance coverage disputes, involving CGL, first-party and E&O policies.  Mr. Timpane received his JD from Berkley Law in 1984.

Case Law: “United States ex rel. Schutte v. Supervalu Inc.”

In June 2023, the United States Supreme Court interpreted the “knowingly” element of the False Claims Act, 31 USC § 3729. The False Claims Act imposes liability on anyone who knowingly presents a false or fraudulent claim to the government for payment or approval. The Court held that a defendant cannot rely on other interpretations of a statute or claim when the defendant had actual knowledge that their claim was false at the time of submission. In other words, the Court held that the defendant must have had some subjective knowledge that their claims were false to be liable under the False Claims Act. United States ex rel. Schutte v. Supervalu Inc., 598 U.S. 739 (2023).

Emma Vanderweyst, Smith Currie Oles

Emma Vanderweyst is an Associate with Smith Currie Oles in the Seattle office. She advises and represents construction owners, architects, engineers, general contractors, subcontractors and suppliers on both public and private projects. Handling a wide variety of matters, she drafts demand letters, motions and pleadings, reviews documents and contracts and closely analyzes the facts she uncovers.

With in-depth familiarity with Washington state law, Emma is well equipped to research and identify relevant statutes and regulations that reinforce clients’ cases. An excellent writer, she draws on her experience on the University of Washington Law Review and in her work as a writing coach when she was an undergraduate.

Always highly responsive to clients, Emma forms strong relationships that enable her to collaborate well and contribute her insight to the teams she serves on. With a keen sense of empathy, she enjoys working with people who are new to the legal system and resolving their problems with as little stress for them as possible.

Previously, Emma gained legal experience in a variety of law-related positions, including working as a Rule 9 intern with the University of Washington Legal Services, where she represented college students in landlord/tenant disputes and other civil matters. She also served as a legal intern with the Seattle City Attorney’s Office, the Washington State Office of the Attorney General, and the FIRST Legal Clinic.

DECEMBER

MCLE: “The Evolving Landscape of California’s Solar Laws; an Overview of California’s Solar Mandate and Net Energy Metering (NEM) 3.0″

California’s “Solar Mandate,” which went into full effect in January 2023, requires all new residential construction to be “solar-ready” and imposes building code requirements to incorporate solar installations on new residential and commercial construction projects.  Builders will need to be aware of compliance changes resulting from these new regulations.  In December 2022, the California Public Utilities Commission (CPUC) adopted Net Energy Metering (NEM) 3.0 which dramatically alters how solar customers (both residential and commercial) are reimbursed for energy they import from the grid and the energy they export (or sale) to the public utility companies.

The California Court of Appeal has recently agreed to hear an appeal brought by stakeholders to the CPUC’s NEM 3.0, and the Court’s decision will impact thousands of Californian’s energy bills and the incentives used to promote the proliferation of solar power.  This presentation will cover the need-to-know provisions for advising contractors affected by the Solar Mandate, and will discuss CPUC’s NEM 3.0 and the possible consequences from the Court of Appeal’s pending decision.

Henry Stegner, Rogers Joseph O’Donnell

Mr. Stegner is an associate at Rogers Joseph O’Donnell (RJO).  He litigates in state and federal courts and is a member of RJO’s Construction and Government Contracts practice groups.  Prior to joining RJO, Mr. Stegner clerked for three judges in federal courts: U.S. District Court (E.D. Cal), U.S. District Court (E.D. Wash.), and the U.S. Court of Appeals for the Ninth Circuit.  He is an active member of the LAC and presented at the 2022 Legal Retreat on the Federal Infrastructure Act.   Mr. Stegner is licensed to practice law in California, Washington, and Idaho.

Case Law: “Stronghold Engineering Incorporated v. City of Monterey, 2023 Cal. App. LEXIS 854”

This case involves the interpretation of Gov. Code Section 810 et seq.’s requirement that before filing a lawsuit asserting a claim for money or damages against a public entity, a claim must be presented to the entity.  Here, Stronghold filed its initial complaint for declaratory relief only (no claim for money or damages) seeking the interpretation of contract language within the construction contract and the change orders at issue.  The Trial Court ruled that Stronghold violated the Gov. Code by not first presenting its claim for declaratory relief to the City.  The Trial Court eventually granted the City’s motion for summary judgment.  On appeal, it was held that the initial complaint was not a claim for money or damages, so the Gov. Code requirement did not apply, and the granting of summary judgment was reversed.

Justin Gelzayd, SMTD Law

Justin Gelzayd focuses his practice on construction and surety litigation. Mr. Gelzayd’s professional experience includes litigating cases involving construction defects, contract and bid disputes, and forming corporations and LLCs. Mr. Gelzayd is licensed to practice law in California and Florida.  Before going to law school, Mr. Gelzayd earned an accounting degree from the University of Arizona. Mr. Gelzayd earned his J.D. and LL.M. from the University of Miami School of Law in 2016.

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